The contract should include a detailed description of the individual uses of the copyrighted works or artistic performances. Do not use general phrases such as “the composer assigns all rights to the incidental music to the producer” as such phrases give rise to legal uncertainty. Even though an unlimited license agreement (buy-out) for a one-off license fee may be entered into, please note that the artist may become entitled to additional fair compensation if the one-off fee agreed in the agreement is disproportionately low with respect to the profit made under the license (“bestseller clause”).

License Fee

In consideration for the license, artists are entitled to reasonable remuneration. The remuneration may have two forms: a flat fee (e.g. CZK 5000) or a percentage fee (e.g. 30% of the revenues of the producer from the use of the license). The forms may be used separately or combined.

It is also important that the agreement includes a clear separation of the fee for the creation of the work or performance and the license fee for the use of the work or the performance. The reason is that the law requires that the fee be specific; if the fee was agreed as a total sum without such break-down, it would not be clear what part corresponds to the creation of the work and what part corresponds to the license. In extreme cases, such a fee could be held to be invalid as being unclear. The usual practice is to give a percentage of the fee corresponding to the each of the components (e.g. 70% accounts for the creation of the work and 30% accounts for the license fee). This also involves accounting and tax consequences (the VAT rate is different for the creation of the work and for the license fee; the flat rate of expense deductions is different for license income and business income for some professions such as photographers).

Applicable Law

International projects with the participation of foreign artists and other professionals raise the issue of applicable law. Under Article 3(1) of the Rome Convention on the Law Applicable to Contractual Obligations (Rome I Convention), the contract should be governed by the law chosen by the parties. It may, thus, be agreed in the contract that the agreement is governed by Czech (contract) law. It is recommendable that Czech managers, producers and artists make an effort to have their agreements subject to the Czech governing law so that they do not have to face the issue of ignorance of foreign law. If no law is chosen by parties in the agreement or if there is no close connection with a law of another country (e.g. determined by the place of the creation of the work or the place of performance), Article 4(2) of the Rome I Convention stipulates that the agreement is governed by the law of the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence.

Example

A Croatian costume designer has prepared costumes for an opera to be staged in a Czech theatre under a contract to commission theatre costumes. The Czech theatre has rehearsed the play using these costumes and plans to stage the play publicly. The original agreement, however, lacked a licensing provision governing the repeated use of the costumes for public performances. For the avoidance of doubt, the theatre started to negotiate the terms of the license for such further use with the Croatian costume designer. How should the license be regulated in the agreement?

If the license agreement lacks a governing law clause, the agreement will be governed by Croatian law because the Croatian designer provided a service under the original contract for work, i.e. created the costumes, and is now to provide a new service consisting in the license (Article 4(2) of the Rome I Convention). To prevent the agreement being governed by Croatian law, the Czech theatre must insist on the Czech law being agreed as the applicable law.

When drafting the license agreement, the following points must be considered:

Does the theatre wish to have exclusive license to use the costumes; in other words, would they mind the same costumes being used at another place/by another theatre or in another play?

What countries will the costumes be used in: will the theatre stage the play only it its theatre in the Czech Republic or also in other countries in Europe or in the world?

How long does the theatre wish to stage the play: one year, five years, ten years or even seventy years after the costume designer dies?

Will other theatres or partners (co-organisers, sponsors) be able to use the costumes: does the theatre wish to be able to grant sublicenses to third parties?

The answers to these questions should be considered, prepared and incorporated in the license agreement. Otherwise, the purpose of the agreement will be relied on, which may create substantial tension and uncertainty for the parties.

If the parties fail to enter into a license agreement, the theatre will be able to use the costumes to a certain extent (defined by the purpose of the original contract for work) during public performances, but a number of question difficult to answer would arise; e.g. is the theatre authorized to use the costumes when staging the play in Europe, or not?

The above example shows that any issues (including, but not limited to, any future uses of the costumes) must be agreed in advance and defined in the contract in order to prevent legal uncertainty.

Competent Court

Unless the parties agree otherwise, any disputes before foreign courts in the EU will be governed by the rules of international procedural law, or Brussels I Regulation. In cross-border cases (i.e. outside the territory of EU member states), arbitration may be more convenient as arbitration awards are easier to enforce.

Contracts Used in Scenic Arts

There are many types of contracts used in scenic arts and any attempt at their brief overview is difficult.

External partners of theatres usually enter into contracts for commissioning a work or a performance, which are usually merged with license agreements into a single contract. For templates of contracts for actors on rehearsal and repeated performance as well as (annotated) license agreements for their use, see here.

Other than regular partners, technical and theatre staff as well as seasonal employees may be employed under an agreement to complete a job (this does not constitute self-employment). Please note that an employee’s work or performance may be created under a contract of employment as well as agreement to complete a job or agreement to perform work. In practice, it is often difficult to make a distinction between contracts for freelance artists and employment contracts and agreements for employees to assess which type of contract or agreement is advisable to be used in the individual cases. The most relevant criterion is whether the person is subordinated to and dependent on the instructions of the theatre/employer and whether the person works at the same place and within specified times.